Improving Organizational Effectiveness and Competitiveness

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"The person who figures out how to harness the collective genius of his or her organization is going to blow the competition away." (Walter Wriston)

Strategic management is all about anticipating, adapting to, driving and capitalizing on change. To quote Bill Gates, "What was isn't any more and what is won't be for long." Add this to increasing levels of uncertainty, and an organization's ability to learn, anticipate, adapt and innovate will have as much to do with its long-term success and viability as the operational and tactical skills that have traditionally separated the winners from the also rans.

As businesses grow and become more complex, the commitment, involvement and contributions from employees throughout the organization will be a primary competitive differentiator. The old command and control management models where the "big" ideas have to originate at the top and where decision making is highly centralized are increasingly likely to stagnate and lose their competitive advantage. These businesses are unlikely to have the entrepreneurial, continuous improvement, ownership culture that will be required to remain at the front of the pack.

Invite Participation
A business's ability to cultivate "thought leaders" is essential. It separates an organization invested in personnel asset development from an organization that is simply invested in superficial asset management. Only within an atmosphere that invites participation and success will people and organizations live up to their potential. It is also extremely important to build the confidence level of each individual on the employee team in order to enhance the probability that some level of courage and self-motivated initiative are exercised.

Without good attitudes and confidence, the desired culture or performance is rarely achieved and the journey will be one of frustration. A clear understanding of the objectives and value of the goal process is critical for the confidence piece to be present if the long-term objectives are to be met in an ever changing environment.

Don't get us wrong. Strong, visionary leadership, policies, procedures, performance metrics and monitoring systems are critical to any organization's success. The challenge is finding ways to create a culture that unleashes the potential of the organization. Our point is that dictatorships or bureaucracies tend to kill initiative and innovation because potential "thought leaders" quickly learn that from a personal standpoint, the penalty for questioning the way things are done or making a mistake far outweighs any potential gain from trying something new or different. These organizations tend to develop excessively rule bound, conformist cultures that are hamstrung by the status quo and permeated by mediocrity.

Develop Personnel Assets
Great organizations not only believe in the necessity of making mistakes, but also see mistakes as virtually synonymous with growth and progress. Their belief is that if people haven't failed, they haven't tried hard enough.

The objective is to learn from and avoid making the same mistake twice. These organizations spend as much time analyzing what they need to stop doing or do differently as they do evaluating new opportunities. Alternative approaches and new ideas are not only allowed, they are encouraged and even rewarded through incentives whenever they produce positive results. To stay ahead in this rapidly changing world, the internal rate of change in an organization needs to exceed the rate of change in its external environment. If it doesn't, the organization will be falling behind even though it may be moving ahead.

There are reasons that organizations such as General Electric became institutional names for decades, and why others never attain such a revered standing. One of these reasons is their emphasis on personnel asset development. They cultivate "thought leaders" among their employees and ascending managerial-leadership ranks.

Creating "wise organizational decision making" individuals, environments and groups requires:

  • An environment that champions such behavior.
  • Leadership at all levels that encourages and rewards the constructive challenge of issues, logic and decisions.
  • Individuals with a hunger to learn and mentally grow daily.
  • Individuals with a capacity to accept accountability and fulfill expectations.
  • An organization that inspires a self-starter attitude and allows for learning to take place, even in the face of mistakes.
  • And most importantly, an organization that does not stifle "thought leaders" through micro or only "my way" management.
Greatness Comes from People
An organization's failure to sustain forward movement begins with individuals, teams, departments and managers who smother independent thought processes. The inefficiency of this operational mode can lead to significant loss: loss in business growth, loss in customer retention and loss in securing new customers.

Ultimately, it will make it difficult for the organization to attract, uncover or retain potential "thought leaders" and encourage those who have better opportunities to leave.

Ultimately, it is people rather than things that take an organization from good to great. Two pioneering management studies, both published as best selling books, Good to Great and First Break All the Rules: What the World's Greatest Managers Do Differently, came to the same conclusion. Organizations become great by getting the right people, in the right places, doing the right things and then managing them in a way that allows them to perform up to the best of their abilities.

Many of the hard charging owners and executives we have worked with over the years see the issues we have been discussing as important, but too soft and lacking in a specific process-oriented solution. Our response is that it is precisely because it is so difficult and so few do it well, that it makes so much difference in terms of an organization's performance (effectiveness) and competitiveness. Jim Collins, author of Good to Great, wrote, "Good is the enemy of great. And that is one of the key reasons why we have so little that actually becomes great. We don't have great schools, principally because we have good schools. We don't have great government, principally because we have good government. Few obtain great lives, in part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good-and that is their main problem."

No Formula Leadership
Effective leadership can't be captured in or implemented by a formula. There are best attributes, but there isn't one best practice. It is for that reason that a lot of great technicians, theorists, doers, politicians and hard asset managers frequently aren't great leaders. The required talent set is different. To quote Albert Einstein, "Not everything that counts can be counted and not everything that can be counted counts."

There obviously are and have been numerous small organizations with a leader that has the ability, span of control, and vision to treat employees as basically "hired hands" and be extremely successful. There have also been legendary "dictatorial" superstars who have led large organizations to the top of their field. Our point is that as organizations grow, become more complex and have to adapt to change more rapidly on multiple fronts, this style of management is less likely to be successful or sustainable. These organizations will be far more likely to fail or experience an unnecessary and potentially catastrophic adjustment whenever a leadership transition occurs. Too often the remaining management team will be comprised of technical staff and loyal soldiers who have become dependent on and accustomed to being directed rather than leading. They will not have been selected, trained or managed to equip them to assume the reins. The culture instilled in the overall organization will also not be conducive to adapting rapidly.

The art and science of management will continue to evolve. Even for the best, management and leadership will always be a work in progress. We strongly believe, however, that a leadership model embracing continuous change and the constructive expression of employees' ideas and initiative will be more effective and competitive than one which operates as if the source of all best ideas emanate from or reside in the executive suite. At the same time, the positive energy and atmosphere that cultivates and fosters "thought leaders" cannot be experienced in an organization, unless the leadership at the top first exemplifies it.

The two authors see the need for ag lending organizations to look at their business structure for allowing contributions by all employees and improved business operations. Klinefelter is a professor and Extension economist with Texas AgriLife Extension at Texas A&M University and director of The Executive Program for Agricultural Producers (TEPAP) program. Magee is author of The Managerial Leadership Bible and teaches leadership and managing change at TEPAP. You can find out more about Dr. Magee at www.jeffreymagee.com.

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